Adient takes $11 million haircut on sale of Detroit building, report says
DETROIT -- Seating supplier Adient plc lost more than $11 million in the sale of its planned downtown Detroit headquarters property across from Cobo Center, the home of the Detroit auto show, Crains Detroit Business reported on Thursday.
A $25 million sale of the 164,000-square-foot Marquette Building at 243 W. Congress St., an approximately 400-space parking deck at 328 W. Congress and a surface parking lot at 225 W. Congress closed Wednesday to an entity tied to Detroit-based real estate company Sterling Group, according to a source familiar with the matter.
The source said Sterling Group plans to market the property for lease.
Adient didnt respond to an email from Crains Detroit Business seeking comment on the transaction. Crains is an affiliate of Automotive News.
The spinoff of Milwaukee-based Johnson Controls Inc. paid $36.13 million to acquire and improve the property over the course of a year between November 2016 and November 2017, according to city property records.
Its not known how much money the company sunk into what was to be its new headquarters in the Marquette Building, a $100 million plan for which was scrapped this summer. Adient will remain in its suburban Detroit headquarters, a spokeswoman said at the time.
Detlef Juerss, the companys vice president of engineering and chief technology officer, said in August that the downtown Detroit plan was a mistake. "Detroit was not the right timing," Juerss said at the 2018 CAR Management Briefing Seminars in Traverse City, Mich. "We should have spent that money somewhere else."
It would have been home to about 500 employees, including more than 100 new hires in such departments as legal, accounting, audit and treasury. It received a $2 million state incentive. The city also offered a property tax incentive, according to the Michigan Economic Development Corp.
Adient is tax-domiciled in Dublin, Ireland. The company ranks No. 11 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $16.2 billion in 2017.
Adient last month named industry veteran Doug DelGrosso as its new CEO, replacing former General Motors chief Fritz Henderson, who served as Adients interim CEO. Henderson will remain as nonexecutive chairman. The supplier plans to report its most recent quarterly results on Nov. 9.
Since spinning off from JCI, Adient has struggled to maintain consistent profitability, reporting a $1.5 billion loss in 2016 before recovering to net income of $877 million last year. In 2018, its balance sheet has been dragged down by its money-losing seat structures and mechanisms division with its $3.3 billion in debt. In the second fiscal quarter of 2018, Adient reported a net loss of $168 million on revenue of $4.6 billion, but recovered in the third quarter with a $54 million profit.
Mexican businessman Carlos Slim Helu bought the Marquette Building for $5.8 million in 2014 and sold it to Adient in November 2016 for $16.9 million. The company also paid about $19.23 million combined for a parking deck (November 2016) and surface parking lot (November 2017), according to city property records.